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David Walker  
Barrel Sampler
Posts: 2284
 | | 07-10-2004 01:36 AM |
| I'm curious: When a winery closes it's list, how does it determine the "cut-off" number? Obviously the determination is made largely on production quantities, but how does it deterimine how much wine to offer each person, especially in a "first-year" offering? I'm also curious to know the number of people who are lists like Screaming Eagle or Harlan...50? 500? I really have no clue. I know several folks on this forum are on such lists - does the winery ever provide insight to this number? I'm assuming Kistler has about 30,000 people on it's mailing list (and each person gets roughly 20 cases of wine offered to them).  | | |
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Bob Bressler 
Napa Valley
Wine Lover
Posts: 4891
| | 07-10-2004 05:30 PM |
| This is a really complicated question.
- people don’t buy the same amount every year
- new people on the mailing list will not necessarily buy the wine
- production levels change year to year (we had more tons of grapes in 02 compared to 01, but wound up with 1 less barrel)
- Quality – or at least the ratings – change year to year.
Most wineries have multiple channels including direct, restaurant, retail, etc. – each with their own changing demands.
Even when production goes up there is still the decision about increasing the number of customers or increasing allocation size. When production goes down, as it has recently for Araujo and Dalla Valle, it is even an uglier problem
Look at all the shots we took at Harlan for allocating one bottle of the 01 Estate. They had a real success crisis with a killer wine that suddenly everyone wanted.
The issue of closing the list is really a customer satisfaction issue. If you send someone an offer letter and then they can’t get the wine – you have an unhappy customer. If you close it too soon, you don’t sell all the wine and have to go out for a secondary offering – and then those customers feel second class.
Pretend that you are a vintner with a larger amount of wine than you had last year. Would you let you current customers buy more wine? Or, would you offer the wine to a larger number of customers? | | | |
| David Niederauer
Los Gatos, CA
Master Sommelier
Posts: 15756
| | 07-10-2004 05:41 PM |
| I would definetly offer it to more customers.
And if some people really want more they can buy it on the secondary market.
I would also keep a dozen cases or so held back and offer it later as a library wine to the mailing list somewhere down the road with a future release. Holding the wine back is an expensive proposition but I think that I could get a decent roi if the wine is as high a quality as I would like to think it would be.
If you held a $75 release price wine and then re-released it five years later at $125 what would be the roi (come on mbansek-you know how to figure this out with the present cost of funds etc)? | | | |
| Robert Prosperino
Brewster, NY
Barrel Sampler
Posts: 2483
| | 07-10-2004 09:13 PM |
| Quote:
Pretend that you are a vintner with a larger amount of wine than you had last year. Would you let you current customers buy more wine? Or, would you offer the wine to a larger number of customers?
I think the answer is dependent on how much more wine I have to offer and will that level of production be sustainable. If it is sustainable, then I offer more wine to existing customersand add new customers. If the increase is not sustainable then I probably would only offer it to existing customers (or at most add a few more new customers). I think that I would always take care of the customers that order year to year (in good and bad vintages). You have to reward loyalty. | | | |
| JimmyV
Central Connecticut
Wine Connoisseur
Posts: 5168
| | 07-12-2004 02:46 PM |
| Quote:
I think that I would always take care of the customers that order year to year (in good and bad vintages). You have to reward loyalty.
But if you are a fairly new venture, this doesn't apply. To the contrary, if you are fairly new venture, you have little to no past experience on which to draw to determine what the attrition rate will be for existing customers. Look at Bob's situation. He sold out his wine in no time flat. The wine is excellent. But, and I mean no disrespect, the wine has been flat on the secondary market. (Good for me, because I picked up several extra bottles). There may be a decent number of people who bought the 2000 hoping that it would turn them a profit. As it hasn't, many of those profiteers may fall off the list. Bob has no way of knowing. So expanding the list at the outset maximizes the possibility that Bob will find that critical mass of yearly loyal customers to sustain the venture. True, in a low yield year, this will mean cut allocations (see 2001 Jones), but it is still better (for the business) to cut allocations in a small crop year than it is to fine a home for a $75 wine in a high crop year. Wine is a business after all. And in most businesses, what is good for the shareholders is often not always good for the customer, and vice versa.
It is unclear whether Screaming Eagle can be used as an example of anything. But this year, rather than allocating 4 packs to existing customers, they let new customers buy three packs. And they did this with no promise that the new customers would get an allocation in the forseeable future. I suppose that there are existing customers who are upset over this practice. But in one fell swoop, Sreaming Eagle reversed its longstanding reputation of being "closed" and caring nothing about the folks on its waiting list. Good customer relations such as this can be critical. | | | Beta testing a new signature. | |
| Robert Prosperino
Brewster, NY
Barrel Sampler
Posts: 2483
| | 07-12-2004 03:08 PM |
| You can still offer the wine to your existing customers first, and if any wine is still availalbe, then send a second mailing out to new customers. I believe that is common practice with many mailing lists.
I am on Colgin's list, but received my allocation in a second "wave" that was sent out about a month after the initial wave. They seem to have several waves based on seniority, buying history, etc. | | | |
| Winegeek
San Francisco
Barrel Racker
Posts: 1525
| | 08-11-2004 01:23 AM |
| Quote:
I'm also curious to know the number of people who are lists like Screaming Eagle or Harlan...50? 500? I really have no clue. I know several folks on this forum are on such lists - does the winery ever provide insight to this number?
Most wineries are pretty close-mouthed about these kinds of numbers, but it's not hard to come up with wild guesses. (Especially for those of us whose college major was wild guesses.)
I think Harlan typically makes about 1,500 - 2,000 cases of their Estate Cab every year. They sell some to selected wine shops and restaurants, but it's probably safe to assume that 75% of the production goes to the mailing list. So if they make 2,000 cases of wine and 1,500 goes to the mailing list - some people getting a case, some getting 6 bottles, etc., they must have at least 3,000 people on their active list, maybe more.
Screaming Eagle is a bit easier. Jean Phillips makes about 450 cases in most vintages. Some is sold to restaurants and there are two wine shops that get a small winery allocation (full disclosure: I'm one of the wine shops that gets some.) She also holds some wine back for charity auctions, her wine library and to share with friends. So If there are roughly 350 - 400 cases available to the mailing list and everybody gets exactly three bottles, then there are probably about 1,500 names on the mailing list.
Richard | | | |
| David Walker
Barrel Sampler
Posts: 2284
| | 08-11-2004 02:27 AM |
| | Thanks, Richard. | | | |
| Robert Prosperino
Brewster, NY
Barrel Sampler
Posts: 2483
| | 08-11-2004 08:22 AM |
| | Richard, thanks for the info. One question comes to mind: How did you get the distinction of being one of only 2 retail wine shops to get an allocation of Screagle? | | | |
| Winegeek
San Francisco
Barrel Racker
Posts: 1525
| | 08-11-2004 05:39 PM |
| It's a bit of a long story but suffice it to say that Jean Phillips is a friend. What most people know about her is that she grows great grapes and makes great wine. What many people don't know is that she is an extraordinary human being with an incredibly big heart and generous spirit. Among the many ways she gives back to the world is through the Find Your Wings Foundation, something she started to provide educational help to the kids of the Mexican farmworkers in the Napa Valley - computers, college scholarships, etc. To help support her in these efforts, we buy Screaming Eagle at the mailing list price of $300, sell it for $900 and then donate $500 to the Foundation.
Richard | | | |
| Robert Prosperino
Brewster, NY
Barrel Sampler
Posts: 2483
| | 08-11-2004 06:17 PM |
| | Richard - I wasn't aware of the foundation. It is great to hear stories like this! | | | |
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